When a company relocates to a region, it creates a lot of benefits that spin off to the entire broader region, county and state as a whole.
Mayors, city officials, economic development teams and groups are working together to facilitate more economic development opportunities throughout the state by finding the right locations that best serve the needs for new businesses.
“A lot of things make the economy tick,” says Jim Rounds, president of Rounds Consulting Group. “We are doing a great job of storytelling on the marketing side — on the front end — with why Arizona is a great state to do business in.”
Arizona is largely considered a business-friendly environment with favorable tax rates, regulatory policies and operating costs.
Areas like Foreign Trade Zones create significant tax advantages for companies serving international markets. Cheap land and energy aids in delivering the needed transportation and utility infrastructure for businesses and more economic development. Throughout his career, Rounds has delivered hundreds of presentations to policymakers, government officials and public and private business leaders in metro and rural communities across the state about economic development and public policy.
But economic development is not a one-size-fits-all model.
Some communities are still better suited to meet the needs of a particular company based on its industry or the market it serves.
Rounds says overall, Arizona is doing a terrific job in working together to market the advantages it provides businesses to niche industries.
Once economic developers understand the economic data and dynamics within a community, then they can leverage the surrounding assets to attract companies to the area and advance the community.
Aerospace and defense
For instance, Arizona has established itself as a hot spot for the aerospace and defense industry, which is home to 1,200 companies, including Raytheon, Honeywell, Boeing and Lockheed Martin.
According to the Arizona Commerce Authority, A&D contributes 5.91 percent to Arizona’s gross domestic product, the third-largest contribution by any state in the nation.
Mignonne Hollis, the executive director of the Arizona Regional Economic Development Foundation in Sierra Vista, says this region doesn’t have as much air traffic as larger metro areas, making it an excellent climate for flying and testing.
That makes sense that the country’s largest provider of guided missiles, Raytheon, which has a major presence in Southern Arizona.
“Each community needs to figure out what data is relevant to them, how to tell their story,” says Rounds. “It’s not rocket science, but you need people working on solutions for economic development issues without egos and with collaboration.”
John Lewis, former mayor of Gilbert and current president and CEO of East Valley Partnership, points to Downtown Gilbert and Heritage Marketplace as a great success story of public/private partnerships that created a thriving mixed-use development with retail, restaurants, bars and entertainment options.
Although Heritage Marketplace seems like an overnight success story, it was actually 30 years in the making, Lewis says.
During his tenure as mayor, Lewis says he learned, “The best way to sell my local community was to sell Arizona, sell Greater Phoenix, sell my sub-region, then I can sell my own municipality.”
In the West Valley, a Foreign Trade Zone helps make the region attractive for manufacturing and distribution centers with high volumes of imports and exports because of FTZ tax advantages and the region’s close proximity to California.
The recently completed Loop 303 freeway allows truck drivers going to and from industrial facilities in the area — like REI Distribution and Dicks Sporting Goods — to travel to the ports and markets in California in less than a day to deliver supplies and products.
On the opposite side of town, Mesa is establishing itself as a hot market for data centers and high-energy-use companies.
One reason is because Easy Valley employment corridors like the Elliot Road Technology Corridor in Mesa were designed with the needed infrastructure to facilitate at least one data center.
With thousands of acres of shovel-ready sites and a streamlined entitlement process, the area was able to land Apple’s new 1.2-million-square-foot “Global Command Center,” which is prompting more technology and data firms to consider the corridor.
Lewis says the Apple facility required the Salt River Project, City of Mesa and local leaders to quickly meet the company’s requested needs before it would commit to the site.
In most cases, the building blocks of all businesses start with reliable water, energy and infrastructure, which are at the top of site selectors’ priority lists.
If everybody continues to leave their egos at the door and they want to work together, Rounds thinks Arizona will continue to advance the state’s position that directly impacts development, commercial real estate, job growth and the economy.
Deserts are known for their scarcity of water, which is why efficient management and regulation of Arizona water supplies and usage were implemented early on to ensure the viability of the region.
For Arizona, water is and always will be an important issue. Continued forward thinking, smart policies and partnerships on new projects to better utilize and save water supplies remain critical in the development of the state.
“Nearly all economic activity relies on the ability of some amount of water and water infrastructure,” says Gretchen Kitchel, economic development analyst at SRP.
Efforts to properly manage the state’s water supply started in 1903 when SRP — known then as the Salt River Valley Water Users’ Association — led the financing, building and operation of one of the first federal reclamation projects in the nation — the Theodore Roosevelt Dam, which was completed in 1911.
Today, SRP’s water management networks consist of 13,000-square-miles of Salt River and Verde River watershed, more than 250 groundwater wells and seven dams and reservoirs to service a 2,900-square-mile area with electric and water.
Christa McJunkin, director of water rights and contracts at SRP, says, “The dependable water supplies — Salt and Verde rivers’ water and groundwater — managed by SRP on behalf of our customers facilitated the development of the Valley of the Sun.”
She says Arizona uses less water today than it did in 1957.
This is partially attributable to collaboration between different cities and officials to fund and construct new facilities to more effectively manage and treat water for portable and non-portable uses like irrigation.
Lewis remembers several occasions where he partnered with officials from the cities of Mesa, Gilbert, Queen Creek and Chandler to build new water treatment facilities.
He says in 2009, during his first year as mayor of Gilbert, he worked with Chandler to build a water facility that saved both cities $10 million in up-front costs and $800,000 in yearly maintenance costs.
In addition to Arizona’s cutting-edge water management infrastructure, Arizona has always been on the forefront of effectively managing its water supplies to ensure the region’s future.
The 1980 Groundwater Management Act created Active Management Areas with policies to regulate usage in urban areas.
One policy requires AMAs to prove there’s a 100-year renewable water supply before homes can be sold or built, which was the first regulatory measure of its kind and has since been replicated in other states.
“The combination of advance planning, investment in resources and infrastructure, with careful regulation, sets Arizona apart,” McJunkin says.
Businesses can’t operate if employees can’t turn the lights on. An added bonus is that in Arizona, energy is bountiful and affordable.
Arizona public utilities cost substantially less per kilowatt hour than other western states, according to the U.S. Energy Information Association.
It helps having assets like the Palo Verde Nuclear Generating Station, the largest nuclear power plant and second-largest power plant of any kind in the U.S.
The story to watch in Arizona as it pertains to energy is in renewable energy, particularly solar.
In a state where it’s sunny 300-days per year, Arizona is uniquely positioned to take advantage of the emerging solar energy market.
In 2014, Arizona ranked second in the nation in utility-scale electricity generation from solar energy. Plans are to meet 20 percent of retail demand through renewable energy by 2020.
If Arizona can capitalize on the solar supply chain and green-technology sectors, it can become the hot spot for solar component manufactures and solar company headquarters.
Similar to the aerospace and defense sector, the solar energy industry is positioned to take advantage of the resources readily available — like affordable land and plenty of sun.
Without the proper infrastructure, the efficient delivery of water, energy, goods and services would not be possible.
The services that infrastructure needs to support are largely dictated by the consumers’ needs — whether it’s for residential, commercial or economic development.
Looking at transportation infrastructure, Arizona has recently shown great strides in infrastructure investments to support economic development in its freeways and railways.
The completion of the Loop 303 in the West Valley created a new employment and transportation corridor, known as PV303, spurring multiple big box industrial built-to-suit projects, with more planned in the future.
The Arizona Department of Transportation also recently started the Loop 202 expansion to alleviate traffic congestion in Metro Phoenix and stay ahead of growing demands.
There’s even talk about turning State Route 30 into a toll road, which runs parallel to I-10 just north of South Mountain.
“It’s necessary to have good access to transportation to be successful in real estate development, but it’s not sufficient,” says Eric Anderson, transportation director for the Maricopa Association of Governments. “You have to have other things in place, too. You have to have some other positive economic influences in the area as well.”
Things like the light rail system to create convenient access to urban areas and things to do are needed, he says. Areas along light rail routes have experienced a lot of economic and commercial development opportunities, including mixed-use, retail and multifamily projects.
“In Downtown Phoenix, there has been a radical transformation in terms of the revitalization of Downtown,” says Anderson. “Light rail played a big part of that.”
For the last 50-years and counting, the Arizona-Mexico Commission has promoted cross-border dialogue in economic development, real estate, infrastructure and more, representing statewide interests.
Its unified voice helped secure federal funding to improve infrastructure at ports of entry in border communities like Nogales, Douglas and Mariposa.
An investment to improve infrastructure for land ports of entry along the Mexico-Arizona border is helping drive economic development activity in Southern Arizona.
Victor Gonzalez, economic development manager for Sahuarita, which is located about 50 miles north of the border on Interstate 19, says it’s been tremendous to see the activity following the expansion of ports like the Mariposa Port of Entry.
“It really has increased the region’s competitiveness and as a result attracted more investment in the form of warehouses being built to be able to accommodate that flow of goods and services,” he adds.
In total, about 85 percent of goods manufactured in Mexico cross the border into U.S. markets.
These warehouses along I-19 serve as a clearinghouse for the storage of raw material and finished products.
“You have the manufacturing facility on the Mexico side and distribution of that on the U.S. side,” Gonzalez explains.
Before the Mariposa Port was expanded, inspection times ranged from 8-12 hours and 48 hours during peak season,” he adds. Today, he sees trucks cross in a couple hours.
Gonzalez attributes the creation of more economic development opportunities between Arizona and Mexico through the leadership of Gov. Doug Ducey. He says his business background is helping promote the state as a tourist destination and good market for business.
In the digital world, data and broadband connection are essential to managing and coordinating the operations of a business.
The first thing a business or organization needs is access to the speed that fits their needs and budget, says Guy Gunther, CenturyLink vice president of operations for Arizona.
CenturyLink provides services over more than 250,000-route-miles of fiber network across the U.S., offering customers a wide range of IT services and solutions, including network, managed hosting, managed services, colocation and cloud services.
“At CenturyLink, we know that one size does not fit all,” Gunther says, which is why data services are sized and priced to meet a customer’s needs, from small-sized businesses to global enterprises requiring 10G services.
In October, CenturyLink expanded those services by making fiber-ready broadcast speeds up to one gigabyte per second available to 14,000 multi-tenant units in more than 600 cities, which included Phoenix and Tucson.
According to the Ookla Net Index, Internet speeds and mobile networks in Phoenix are among the fastest in the country.
“Businesses that are interested in expanding or relocating to this area want to focus on their core business, not figuring out IT-related issues,” says Gunther. “So we have dedicated significant capital in our metro markets to enable a more complete solution.”